Finding Stability in a Time of Crisis: Lessons of East Asia for Eastern Europe

Paul McNelis ()

No 52014, Working Papers from Hong Kong Institute for Monetary Research

Abstract: This paper examines the options of small open economies in Eastern Europe pegged to the Euro, in a time of crisis. Specifically, should Bosnia and Herzegovina, Bulgaria, Latvia and Lithuania move to full Euro area accession, as Estonia, Slovakia, and Slovenia have done, or follow the examples of Poland, the Czech Republic, and Hungary and opt out of the Euro area? This paper argues that going forward to full monetary union offers benefits over a pure fixed exchange-rate regime. Specifically, the experience of Hong Kong at the time of the Asian crisis in the late 1990's, illustrates the benefits of a credible currency link during a time of crisis.

JEL-codes: E52 E62 F41 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2014-03
New Economics Papers: this item is included in nep-mac, nep-mon, nep-opm and nep-sea
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